o perform the economic analysis of the transformer, it is necessary to calculate its life cycle cost, sometimes called the total cost of ownership, over the life span of the transformer or, in other words, the capitalized cost of the transformer. All these terms mean the same โ€“ in one formula, costs of purchasing, operating, and maintaining the transformer need to be compared taking into account the time value of money.

The concept of the โ€˜time value of moneyโ€™ is that a sum of money received today has a higher value โ€“ because it is available to be exploited โ€“ than a similar sum of money received at some future date. In practice, some simplification can be made. While each transformer will have its own purchase price and loss factors, other costs, such as installation, maintenance, and decommissioning will be similar for similar technologies and can be eliminated from the calculation.

Only when different technologies are compared e.g. air cooled dry type transformers with oil-cooled transformers will these elements need to be taken into account. Taking only the purchase price and the cost of losses into account the Total Cost of Ownership can be calculated by

TCO = PP + APo + BP



PP – is the purchase price of the transformer,

A – represents the assigned cost of no-load losses per watt,

Po – is the rated no-load loss,

B – is the assigned cost of load losses per watt,

Pkย – is the rated load loss.

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